Metropolitan Transit Authority Transport Workers Union ......Certificate of Achievement for Excellence in Financial Reporting 6 Financial Section 7 Independent Auditors’ Report 8

Metropolitan Transit Authority Transport Workers Union Pension Plan, Local 260, AFL-CIO

Comprehensive Annual Financial Report For the Years Ended December 31, 2015 and 2014

Prepared by the Metropolitan Transit Authority Of Harris County, Texas Office of the Controller

Table of Contents

Page Number

Introductory Section (Unaudited) 1 Transmittal Letter from the Chairperson of the Trustees 2 The Trustees and Their Responsibilities 4 Consultants and Money Managers 4 Organization

5 Certificate of Achievement for Excellence in Financial Reporting 6 Financial Section 7 Independent Auditors’ Report 8 Management’s Discussion and Analysis (Unaudited) 11 Basic Financial Statements 15

Statements of Fiduciary Net Position 16 Statements of Changes in Fiduciary Net Position 17 Notes to the Basic Financial Statements 18

Required Supplemental Information (Unaudited) 30 Schedule of Changes in Net Pension Liability 30 Schedule of Employer Contributions 31 Schedule of Money-Weighted Rate of Returns 31

Other Supplemental Information (Unaudited) 33 Schedule of Investment and Administrative Services 33

Investment Section (Unaudited) 35 Overview of the Investment Policy 36 Current Money Managers 38 Investment Values and Returns 41 Trading Fees and Commissions 44 Actuarial Section (Unaudited) 47 Multi-year Information from Previous Actuarial Reports 48 Actuary’s 2015 Certification Letter and Valuation report 51 Actuary’s GASB 67 and 68 Disclosure Report Fiscal Year October 1, 2015 to September 30, 2016

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Statistical Section (Unaudited) 113 Schedule of Benefit Payments to Participants 114 Schedule of Participants by Status 115 Schedule of Benefit Payments by Type 115 Schedule of Retired Participants by Types of Benefits 116 Statements of Changes in Fiduciary Net Position 117

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Introductory Section (Unaudited)

This section provides an overview of the Transport Workers Union Pension Plan, Local 260, AFL-CIO Comprehensive Annual Financial Report, a transmittal letter from the Chairperson, and information on performance, organizational structure, and responsibility for financial reporting. The prior year Certificate of Achievement for Excellence in Financial Reporting is also included.

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METROPOLITAN TRANSIT AUTHORITY TRANSPORT WORKERS UNION PENSION PLAN LOCAL, 260, AFL-CIO

1900 Main St. Houston, TX 77002

August 30, 2016 Plan Participants, Trustees of the Transport Workers Union Pension Plan and Members and the Board of Directors of the Metropolitan Transit Authority of Harris County, Texas (METRO):

I am pleased to present the Transport Workers Union Pension Plan, Local 260, AFL-CIO (Plan) Comprehensive Annual Financial Report (CAFR) for the years ended December 31, 2015 and 2014. The Plan is a defined benefit, non-contributory plan which is for employees covered by the collective bargaining agreement hired before October 1, 2012. New employees hired after that date are placed into a defined contribution plan which is not part of this report. The CAFR has five sections and is one of the few reports which brings together the major financial and management elements of a pension plan. This Introductory Section discusses the overview of the CAFR, the Plan’s performance as well as the MTA/TWU Union Pension Board of Trustees (Trustees) and METRO’s (the Plan sponsor) responsibilities for managing the Plan and providing accurate, reliable financial information.

The Trustees and METRO are dedicated to providing quality financial information and earned, for the fourth consecutive year, the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officer Association.

The five sections of the CAFR, listed below, provide you with information that will help in evaluating the Plan’s performance and sustainability. These sections are:

• Introductory • Financial • Investment • Actuarial • Statistical

Funding Policy and Investment Returns

METRO’s funding policy is to contribute the annual, actuarially determined contribution in equal payments over a 12 month period. Employees do not contribute to the Plan. During 2015, METRO contributed $19 million to the Plan. This contribution consisted of $15.4 million for 100% of the annual, actuarially determined contribution and $3.6 million relating to money received by METRO from the settlement of the BP oil spill.

The Plan had a negative investment rate of return, net of fees, for 2015 of approximately (3.4) percent with a positive 4.9 percent return over the last ten years. The Committee continues to work closely with Marquette Associates, Inc., the Plan’s investment advisor, to implement an investment strategy that will achieve the 6.75% investment rate of return that was adopted in 2014.

Additional information on the Plan’s financial performance is located in the Management Discussion & Analysis which starts on page 11 of this report.

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The Committee and financial advisor routinely met to discuss general market conditions, money managers’ performance and new investment opportunities ranging from commodities to real estate. During the year the Committee reduced the use of active managers and temporarily moved into multiple index funds. Additional information on the Plan’s investment policy, performance and reallocation of investments is located in the notes to the basic financial statements and in the Investment Section (Unaudited) of this report.

The Financial Reporting Entity and Responsibilities for Internal Controls

The Plan is not a component unit of METRO or any other plans and the accompanying basic financial statements include all activities for which the Plan is financially accountable as defined by GASB No. 14, The Financial Reporting Entity and Statement No. 61, The Financial Reporting Entity: Omnibus.

Responsibility for accuracy, reliability and fairness in the presentation of financial information and related disclosures rests with the Trustees and METRO. All disclosures that are necessary to enable the reader to gain an understanding of the Plan’s financial activities have been included. The Trustees and METRO are also responsible for ensuring that an adequate internal control structure is in place for preparation of financial information, safeguarding of assets, effective and efficient use of resources and compliance with applicable laws and regulations. Because the cost of a control should not exceed the benefits to be derived, the objective is to provide reasonable, rather than absolute assurance, that the financial statements are free of any material misstatements.

Other Information and Acknowledgement

This CAFR will be sent to the State of Texas’ Pension Review Board for their review and to the Government Finance Officer Association for inclusion in their Certificate of Achievement for Excellence in Financial Reporting award program. Additional copies of this and prior year reports can be obtained by visiting METRO’s website.

The Plan’s basic financial statements were audited by McConnell & Jones LLP, Certified Public Accountants.

The Committee appreciates the work and dedication of all those who support the objectives of the Plan.

Debbie Sechler 2015 Chairperson Transport Workers Union Pension Plan, Local 260, AFL-CIO

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The Trustees’ and Their Responsibilities

METRO’s President and Chief Executive Officer and the Transport Workers Union, Local 260, AFL-CIO each appoint two Trustees to oversee the administration of the Plan. These Trustees act as fiduciaries (based on State of Texas law) and must perform their duties for the exclusive purpose of accumulating sufficient assets to pay retiree benefits as they come due. They follow the prudent person rule when authorizing expenses and implementing the investment policy. The Trustees are dedicated professionals and included the following as of December 31, 2015:

Debbie Sechler, Chairperson Auturo Jackson John Bland Horace Marves

Consultants and Money Managers

The Trustees rely on many professionals with different skills to ensure the Plan is operating as intended and include:

Consultants Service provided

Marquette Associates, Inc. Financial advisor Milliman, Inc. Actuary

Norton, Fulbright & Rose L.L.P. Legal counsel

State Street Bank and Trust Co Asset custodian, disbursing agent, and recordkeeping

Listing of Money Managers and Related Asset Class

Domestic equity Global fixed income Rhumbline Russell 1000 Large Capital Core Rhumbline Core Bond Pooled Trust Rhumbline Russell 1000 Large Capital Value GMO Emerging Country Debt Rhumbline Mid Capital Growth Brandywine Global Fixed Income SSgA Russell 2000 Small Capital Core International equity Hahn Mid Cap Value T. Rowe Price International Thomas White International

Individual money managers, their market segment, investment approaches, returns, asset custodians, recordkeeping, trading fees/commissions and independent audits are discussed in the Investment Section (Unaudited) of this report.

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Organization

The organization listing provides an overview of all those involved in supporting the Plan.

• The Trustees are responsible for the operations of the Plan. They select the financial advisor, money managers, and consultants who report directly to the Trustees.

• Support staff is provided by Human Resources and the Finance Department of METRO. • Plan participants are those who are eligible to participate in the Plan. • The financial advisor is responsible for assisting in the development and implementation of an

effective investment policy while monitoring the performance of the money managers and the overall markets where investments are made.

• Money managers are responsible for investing the Plan’s assets. • Independent administrative support consist of several organizations which provide services

including legal, actuarial, asset custodial, disbursing agent and independent auditing.

Fees paid to financial advisors, money managers, and independent administrative support are presented in the Schedule of Investments and Administrative Services located on page 33.

Pension Trustees Plan Participants

Independent Admiistrtive

Support Money

Managers Financial Advisor

Support Staff Provided by

METRO

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The responsibility for the accuracy, reliability and fairness of the presentation of financial information and related disclosures in the Comprehensive Annual Financial Report rests with the Committee and METRO. All disclosures that are necessary to enable the reader to gain an understanding of the Plan’s financial activities have been included. The Trustees and METRO are also responsible for ensuring that an adequate internal control structure is in place for preparation of financial information, safeguarding of assets, effective and efficient use of resources and compliance with applicable laws and regulations. The internal control structure has been designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of cost and benefits requires estimates and judgment by management. In addition, the Plan is required by state law to have independent certified public accountants perform annual financial audits. The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Transport Workers Union Pension Plan, Local 260, AFL–CIO for its CAFR for the year ended December 31, 2014. This is the fourth year to receive this award and reflects the commitment to quality financial reporting. In order to receive this award you must publish an easily readable and efficiently organized CAFR report which satisfies both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year. We believe that our current CAFR will continue to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

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Financial Section

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Management’s Discussion and Analysis (Unaudited)

This discussion and analysis section provides an overview of the performance of the Transport Workers Union Pension Plan, Local 260, AFL-CIO (Plan) and should be read in conjunction with the rest of the basic financial statements of the Plan.

The Plan is a single employer, defined benefit plan with the goal of accumulating sufficient assets over time to pay retirement benefits and related operating cost. This goal is accomplished by receiving annual contributions from METRO, investment returns on the Plan’s assets and achieving various actuarial assumptions. Employees do not contribute to the Plan and the Plan does not cover postemployment health care cost. The annual funding requirement and the funded status of the Plan are developed each year from an independent actuarial study. Contributions to the Plan are approved by METRO’s Board of Directors as part of METRO’s annual operating budget.

Adequate diversification in both markets and money managers continues to be an important part of the Plan’s investment strategy. The Trustees reallocated investments during fiscal year 2015 as follows:

Reallocation of

Investments (in thousands)

Terminated money managers LSIA Equal Weighted index $ (19,866) Herndon Large Capital Value ( 36,237) GW Capital Small Capital (8,159) Morgan Dempsey Small Capital (11,619) Brown Advisory Large Capital Growth (32,336) SSgA 1000 Growth - Index (6,946) Reduction in investment balance Brandywine - Global Opportunistic Fixed Income (32,000) Total $ (147,163) New money managers for 2015 Rhumbline Russell 1000 Large Capital Core 25,002 Rhumbline Russell 1000 Large Capital Value 8,760 Rhumbline Russell Mid Capital Value 8,760 SSgA Russell 2000 Small Cap Core 18,779 Rhumbline Core Bond Pooled Trust 32,000 Hahn Mid-Cap Value 22,500 Administration cash account 31,362 Total reallocation of investments for 2015 $ 147,163 Final reallocation of investments was completed on January 7, 2016 as follows: Administration cash account $ (22,000) SSgA MSCI EAFE Small Capital Non-U.S. Core 11,000 SSGA Disciplined Emerging Markets Equity Fund 11,000 $ -

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Financial Highlights

METRO’s 2015 contribution totaled $19 million and consisted of $15.4 million, or 100% of the actuarially determine contribution plus an additional $3.6 million due to the settlement of the BP oil spill that occurred during 2010 in the Gulf of Mexico.

Even with the additional contribution, the net pension liability increased by $42.3 million or 36.2 percent during 2015. This increase relates to $22.9 million from implementing based on the independent actuary experience study, updated actuarial assumptions, and $19.4 million due to investment loss, interest on pension liability and other activities. A listing of the net pension liability components is located on page 30 of this CAFR.

Changes to the net pension liability are reflected, in thousands, in the following table.

2015 2014 Change Total pension liability $ 383,569 $ 346,901 $ 36,668 Less fiduciary net position 224,361 229,990 (5,629) Net pension liability $ 159,208 $ 116,911 $ 42,297

The total pension liability was determined using an actuarial valuation that is dated January 1 of each year and then projected forward to the measurement date which is December 31 of each year and taking into account any significant changes between the valuation date and the fiscal year end as required by GASB 67. The fiduciary net position represents the net assets that are available to pay pension benefits. The complete actuarial valuation and GASB 67 reports are located in the Actuarial Section of this CAFR.

The summarized statement of net position and related changes in net position lists the assets and liabilities that when netted equals the net position restricted for pensions. The values and related changes during the last three years, in thousands, consisted of:

Summarized Statement of Fiduciary Net Position

(in thousands)

2015 2014 2013 Cash equivalents $ 33,185 $ 2,591 $ 3,187 Investments at fair value 191,290 227,391 221,279 Interest and dividends receivable 24 357 99 Less total liabilities 138 349 243 Net position restricted for pensions $ 224,361 $ 229,990 $ 224,322

During 2015 the cash equivalents increased and the value of investments declined as the Plan was implementing, but had not yet completed, a revised investment strategy. The decline in the net position restricted for pensions for 2015 is from investment losses caused by conflicting economic information and the resulting uncertainty in the markets. The 2014 increase relates to investment gains which exceeded the amount needed to cover benefit payments and operating cost.

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Summarized Statement of Net Position Changes During the Last Three Years

(in thousands) 2015 2014 2013 Cash equivalents $ 30,595 (596) $ (188) Investments at fair value (36,101) 6,112 31,198 Interest and dividends receivable (333) 258 21 Less total liabilities 210 (106) - Net position restricted for pensions $ (5,629) $ 5,668 $ 31,031

The two following tables summarize the additions and deletions and their changes during the last three years that when netted equals the net position restricted for pensions.

Summarized Statements of Changes in Fiduciary Net Position (in thousands)

2015 2014 2013 Additions Employer contributions $ 19,062 $ 13,477 $ 14,335 Net investment (loss) income (7,810) 8,435 31,801 Deductions Paid to Plan members and beneficiaries 16,567 15,924 14,887 Administrative services 314 320 218 Changes in net position restricted for pensions (5,629) 5,668 31,031 Net position restricted for pensions Beginning of the year 229,990 224,322 193,291 End of the year $ 224,361 $ 229,990 $ 224,322

Summarized Statements of Changes in Fiduciary Net Position Changes During the Last Three Years

(in thousands)

2015 2014 2013 Additions Employer contributions $ 5,585 $ (858) $ (109) Net investment income (16,245) (23,366) 6,411 Deductions Paid to Plan members and beneficiaries 643 1,037 37 1,412 Administrative services (6) 102 19 Changes in net position restricted or pensions (11,297) (25,363) 4,871 Net position restricted for pensions Beginning of the year 5,668 31,031 26,160 End of the year $ (5,629) $ 5,668 $ 31,031

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Major Activities in the summarized statements of changes in fiduciary net position are discussed below:

Employer contributions increased by $5.6 million during 2015 and related to $1.9 in the actuarially determined contribution (ADC) and $3.6 million additional contribution by METRO from funds that became available due to settlement of the 2010 BP oil spill in the Gulf of Mexico. Net investment loss for 2015 was a negative (3.4) percent net of fees and consisted of a gain in large capital composite of 2.3 percent followed by losses of (6.4) percent in global fixed income, (8.2) percent for small cap composite and (1.6) percent for international equity composite. The Plan’s net appreciation or loss on investments generally followed the markets which increased in 2013 followed by lower earnings in 2014 and a loss in 2015. Benefit payments consist of annuities and lump-sum payments for those who are vested but terminate prior to their retirement date. The amount continues to increase as more employees are electing to retire. Changes to net position restricted for pensions during the last two years were minimal (once netted) as contributions and investment earnings were used to cover benefit payments and operating cost. The increase in 2013 primarily relates to significant improvement in investment income.

Results of the Annual Depletion Analysis A depletion analysis is prepared each year by the Plan’s independent actuary. This analysis determines if the projected 6.75 percent net investment rate of return, when combined with projected contribution reduced by projected benefit payments, is adequate to ensure that all retirement benefits will be paid over the life of the Plan. Based on this analysis, no change to the projected net investment rate of return was required when preparing actuarial calculations included in this CAFR. Contact information

Please contact Office of the Controller, Metropolitan Transit Authority of Harris County, Texas, P.O. Box 61429 Houston, Texas 77208-1429 if you have additional questions.

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Basic Financial Statements

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Statements of Fiduciary Net Position December 31, 2015 and 2014

2015 2014 Assets Cash equivalents $ 33,185,383 $ 2,591,299 Investments, at fair value: Domestic equity 88,613,383 118,717,473 Global fixed income 74,038,126 79,460,432 International equity 28,638,846 29,212,828 Total investments 191,290,355 227,390,733 Interest and dividends receivable 24,285 94,005 Securities in transit - 263,445 Total assets 224,500,023 230,339,482 Liabilities Accounts payable 138,877 294,056 Securities in transit - 55,357 Total liabilities 138,877 349,413 Net position restricted for pensions $ 224,361,146 $ 229,990,069

The accompanying notes are an integral part of the Plan’s basic financial statements.

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Statements of Changes in Fiduciary Net Position Years Ended December 31, 2015 and 2014

2015 2014 Additions Employer contributions $ 19,062,423 $ 13,477,182 Investment (loss)/income Interest and dividends 1,380,500 1,815,928 Net (depreciation)/appreciation on investments (8,338,049) 7,632,448 Investment (loss)/income (6,957,549) 9,448,376 Less: investment expenses 852,342 1,013,392 Net investment (loss)/income (7,809,891) 8,434,984 Total additions 11,252,532 21,912,166 Deductions Paid to Plan members and beneficiaries 16,567,409 15,923,974 Administrative services 314,046 319,754 Total deductions 16,881,455 16,243,728 Net (decrease)/ increase in net position (5,628,923) 5,668,438 Net position restricted for pensions: Beginning of the year 229,990,069 224,321,631 End of the year $ 224,361,146 $ 229,990,069

The accompanying notes are an integral part of the Plan’s basic financial statements.

Notes to the 2015 Financial Statements for the Metropolitan Transit Authority Transport Workers Union Pension Plan and Trust Local 260, AFL-CIO

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Notes to the Basic Financial Statements

1. Overview of the Plan

Plan Description

The Metropolitan Transit Authority (METRO) established the Transport Workers Union Pension Plan, Local 260, AFL-CIO (Plan) for the purpose of accumulating funds to pay retirement benefits and certain related administrative costs. The Plan, closed to new members on October 1, 2012, is a single employer, non-contributory defined benefit pension plan which is for employees covered by the collective bargaining agreement. Retirement benefits are established during periodic negotiations with the Transport Workers Union of America, AFL-CIO and Local 260 of the Transport Workers Union of America, AFL-CIO (Union). Postemployment health care costs are not included in the Plan.

The Plan provides for monthly normal retirement benefits based on the participant’s years of service but not less than $500 each month. The calculation for the monthly normal retirement benefit is based on the designated dollar amount times the number of credited years of service. The designated dollar amount used to determine the monthly normal retirement benefit is based on date of retirement as allowed by the Union labor agreement and consist of:

August 1, 2002 through July 31, 2003 $ 50 August 1, 2003 through July 31, 2004 51 August 1, 2004 through July 31, 2005 52 August 1, 2005 through July 31, 2006 53 August 1, 2006 through July 31, 2007 53 August 1, 2007 through January 31, 2009 54 February 1, 2009 through present 60

Participants can only receive monthly distributions unless their balance is $5,000 or less, then the participant can elect to receive a lump sum payment.

Plan participants are 100% vested after five years of credited services. Participants become eligible to receive benefits at the earlier of 28 years of credit services or at age 60 with 5 years of credited service. The requirements for early retirement with reduced benefits are that an employee reaches age 55 with 25 years of credited service. In addition, the Plan provides for disability retirement benefits with the requirement of having 5 years of credit service. Additional requirements include 5 years of vesting service for vested deferred retirement benefits and for pre-retirement spousal benefits.


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Changes in plan participants between January 1, 2015 and January 1, 2014 were:

Participants 2015 2014 Change Active 2,108 2,241 (133) Terminated and vested 560 555 5 Retired 986 1,018 (32) Disabled 209 175 34 Beneficiaries 247 177 70 Total for all participants 4,110 4,166 (56)

Plan Administration

METRO’s Human Resources Department manages most of the day-to-day activities of the Plan including reviewing retirement options with participants, setting-up retiree payment information with State Street Bank and Trust (payment provider) and responding to retirement questions. The Finance Department provides support that includes administering the overall Plan, preparing financial reports and coordinating and reviewing actuarial information. Administrative services provided by METRO are not charged to the Plan and not reported as cost in the Statements of Changes in Plan Net Position.

The asset custodian is State Street Bank (a federally regulated banking and trust company) which also provides administrative services that include issuing retiree’s monthly checks, lump sum distributions, paying authorized operating expenses and complying with federal tax reporting requirements. The mutual fund and commingled funds maintain independent asset custodial accounts and are audited each year. While the Plan is not covered by the Employee Retirement Income Security Act of 1974, it must comply with Texas state law which covers many topics including:

• An actuarial valuation is performed by an entity that meets specific actuarial experience requirements and files with the State Pension Review Board at least every three years.

• The actuary should make recommendations to ensure the actuarial soundness of the plan. • An independent actuarial audit is completed every five years with the related report filed

with the State Pension Review Board 30 days after finalizing. • Annual financial reports are to be audited by a certified public accountant and filed with

the State Pension Review Board within 211 days after the close of the Plan’s fiscal year. • Investment managers (money managers) must acknowledge in writing their fiduciary

responsibilities and must be registered under the Investment Advisors Act of 1940. • Plan assets are to be kept in an asset custodian account, and money managers (other than

banks) cannot be an asset custodian. • Evaluation of investment services and performance should be done at frequent intervals.


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Plan’s Sponsor Funding Policy

METRO’s funding policy is to annually contribute actuarially determined contribution in equal payments over a 12 month period. Participants do not contribute to the Plan. Contributions to the Plan are authorized by METRO’s Board of Directors as part of their annual budgetary process.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying basic financial statements of the Plan are presented in accordance with generally accepted accounting principles established by the Governmental Accounting Standards Board (GASB), which designates accounting principles and financial reporting standards applicable to state and local governmental units including related pension plans.

Basis of Accounting

The basis of accounting is the method by which revenues and expenses are recognized and reported in the Plan’s basic financial statements. The accrual basis of accounting is used by the Plan which requires that revenues, which include contributions and investment income, are recognized when they are earned and expenses are recognized when the liability is incurred. In addition, benefits payments to members are recognized when due in accordance with the terms of the Plan.

Cash Equivalents

The Plan automatically invests excess cash held by the Plan’s asset custodian into the SSgA U.S. Government Short Term Investment Fund (STIF), which is a commingled fund, and considers this as a cash equivalent. Total amount invested in STIF as of December 31, 2015 and December 31, 2014 was $33,185,383 and $2,591,299 which is uninsured by FDIC and uncollateralized. These funds are available for use to make investments, pay operating expense, and provide monthly benefit to retirees.

Investment Valuation and Income Recognition

Investments in the international equity mutual funds and commingled funds are valued based on the net asset value per unit which approximates fair value of the underlying investments on specific valuation dates. If no sales are reported for that day, investments will be valued at the last published sales price, the mean between the last posted bid and ask price or at fair value as determined in good faith by the fund money manager with assistance from their asset custodian or an independent valuation service. Investments made directly in domestic equities are reported at fair value based on a national security exchange. Purchases and sales of investments are recorded on the trade date.

Dividend income is recorded on the ex-dividend date with interest and investment income reported as earned. Realized/Unrealized gains and losses are presented as net appreciation/loss in fair value of investments on the statements of changes in fiduciary net position.

Investment Expenses

Investment expenses incurred directly by the Plan include fees paid to the Plan’s financial advisor and various money managers.


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Administrative Expenses

Certain administrative expenses such as custodial account, disbursing agent, actuary, audit and legal services are paid by the Plan from contributions received from METRO. Other supporting costs necessary for the Plan to effectively operate are absorbed by METRO and are not charged to the Plan.

Use of Estimates

The preparation of the Plan’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the Plan’s financial statements. Final amounts may change from those estimates.

3. Trustees, Investment Policy and Investments

Trustees act as fiduciaries (based on State of Texas law) for the exclusive purpose of accumulating sufficient assets to pay retiree benefits as they come due. They follow the prudent person rule when authorizing expenses and implementing the investment policy.

The Trustees’ approved investment policy established objectives and guidelines for investing assets held by the Plan and include methods of managing investment risks.

The Plan uses indexes and active managers in implementing its investment strategy and all money managers have accepted, in writing, the responsibility of a fiduciary.

Direct investment in domestic equity is reflected by ownership of specific stocks. Ownership in the domestic equity index funds, the international mutual equity funds and the global fixed income funds are based on net asset value of the related fund. While the direct investment in domestic stock can be actively traded, the remaining investments must be redeemed with the issuing fund.

Additional information on the investment policy, money managers and investment returns is located in the Investment Section (Unaudited) of this report. A complete copy of the investment policy can be obtained from METRO’s Office of the Controller.

The Trustee’s approved asset allocation policy for the last two years was:

2015 2014 Asset Class Target Range Range Domestic equities 27% 17-37% 25-70% International equities 24% 14-34% 0-30% Hedge funds 4% 0-9% 0-20% Real estate 10% 5-15% 0-15% Global fixed income 35% 25-45% 10-50% Private equity - - 0-10% Short-term investments - - 0-20%


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Fair value of the Plan’s investments by asset class, percentage of the portfolio and the change between December 31, 2015 and 2014 are as follow:

2015 % 2014 % Change Domestic equities $ 88,613,383 46.3% $ 118,717,473 52.2% $ (30,134,490) International equities 28,638,846 15.0% 29,212,828 12.9% (573,982) Global fixed income 74,038,126 38.7% 79,460,432 34.9% (5,422,306)

Total investments $ 191,290,355 100.0% $ 227,390,733 100.0% $ (36,100,378)

The projected long-term expected rate of return on pension plan investments was determined using a building-block method in which the best-estimate ranges of expected future real rates of returns (expected returns, net of pension plan investment expense and inflation) were developed for each major asset class. These ranges are combined to produce the projected long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The best estimates of the projected arithmetic, real rates of return for each major asset class included in the Plan’s target asset allocation as of January 1, 2015 and January 1, 2014 are listed below:

Target Allocation

Long-term Expected Real Rate of Return

Asset Class Index 2015 2014 2015 2014 Cash Citigroup 90-Day T-

4.99% 1.13% 0.65% 0.53%

Core Fixed Income Barclays Aggregate 33.00% 34.55% 2.12% 2.05% Large Cap US Equities S&P 500 29.48% 38.46% 3.95% 4.02% Small Cap US Equities Russell 2000 10.02% 13.16% 4.35% 4.43% Developed Foreign Equities MSCI EAFE 22.57% 12.70% 4.45% 4.43% Assumed Inflation – Mean - - - 2.30% 2.30% Assumed Standard Deviation - - - 2.00% 2.00% Portfolio Arithmetic Mean Return - - - 6.60% 6.86% Portfolio Standard Deviation - - 11.39% 11.54%

Projected Long-term Expected Investment Rate of Return - - 6.75% 6.75%

Investments Returns

The money-weighted rate of return, calculated by the actuary, for 2015 was a negative (3.38%) and a positive 4.2% for 2014. This calculation considers the changing amounts actually invested during a period and weights the amount of pension plan investments by the proportion of time they are available to earn a return during the period. The money-weighted rate of return calculation was developed net of investment expenses, and is required by GASB. The financial advisor uses the time-weighted rate of return (geometric method), which is the industry standard, when calculating investment rate of returns included in the investment section of this report and performance reports provided to the Committee. Based on this method, the investment rate of


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return, net of investment expenses, was a negative (3.4) % for 2015 and a positive 4.5% for 2014. The Plan’s investment policy limits concentration risk and the Plan did not own any investments of a single issuer whose value exceeded 5 percent of the Plan’s net position.

Types of Investment Risks

Investing has several types of risks some of which include; custodial, credit, investment concentration, foreign currency, and interest rate. The Plan manages these risks by using an independent asset custodian (State Street Bank and Trust Company), compliance monitoring by the financial advisor, reviewing independent financial audits of the mutual and commingled funds, and allocation of investment dollars among ten money managers who operate in separate markets and whose performance is measured using difference indexes.

Asset Custodian

State Street Bank and Trust Company is the Plan’s asset custodian. Investments made by the domestic money manager are held directly by the Plan’s assets custodian in the name of the Plan. Investments made by mutual and commingled funds are held by their independent asset custodian with the net asset value reported to the Plan’s asset custodian by the related money manager. In addition to the independent asset custodian, the mutual and commingled funds issue independently audited annual financial reports and must comply with oversight rules issued by governmental agencies. Additional information for each money manager is located in the Investment Section (Unaudited) of this report.

Managing investment concentration, credit and foreign currency risk

Domestic Equities The maximum weighting (at time of purchase) in any one company of the investment manager’s portfolio holdings do not exceed 8 percent or 5 percent more than the index weight, whichever is greater.

International Equities The maximum weighting (at time of purchase) in any one company does not exceed 7 percent. Currency hedging, foreign exchange contracts and similar strategies are permitted as part of a defensive strategy to protect the portfolio assets and enhance returns.

Global Fixed Income The global fixed income portfolio may include both domestic and/or international fixed income securities.

Unless authorized by the Plan in advance and in writing, the minimum quality rating of an investment is BBB-. For an issue that is not rated, the security must be of “equivalent” quality to a BBB- rating or above in the opinion of the investment manager, or the security must be a government bond or a bond of a supranational authority which does not have a recognized credit rating.


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The maximum holding (cost basis) in any one security does not exceed 5 percent excluding AAA rated sovereign debt.

To manage currency risk, no investment manager shall have exposure to any one currency exceeding 70 percent for the Euro, 50 percent for the Japanese Yen, 40 percent for British Sterling and 25 percent for others excluding the U.S. Dollar.

Currency hedging, foreign exchange contracts and similar strategies are permitted as part of a defensive strategy to protect the portfolio assets and enhance returns.

Interest Rate Risk

A change in interest rate will affect the underlying value of fixed income investments. Generally, increases in interest rates will reduce the value of the portfolio while decreases in interest rates will add value to such investments. To manage this risk, the Plan’s financial advisor monitors the duration of each fixed income money manager’s portfolio in relation to the appropriate indexes. Significant variances from the benchmark are discussed with the Trustees and the related money manager.

GMO Emerging Country Debt Investment Fund PLC duration was 6.9 years and has a policy of managing the portfolio to within +/- 2 years of the duration benchmark used in JPMorgan Emerging Market Bond Index.

Brandywine Global Opportunistic Fixed Income Fund had a modified duration of 7.86 years while the primary benchmark (Citigroup WGBI (USD)) was 7.30 years. Brandywine concentrates investments where they believe value is greatest; as a result, their portfolios tend to have an intermediate to long duration bias when real interest rates are high. Greater interest rate exposure is assumed in countries with more value and positions are established along the yield curve where it finds the best risk/reward profile.

Rhumbline Core Bond Pooled Trust duration was 5.18 years while the benchmark (Barclays Aggregate Bond index) duration was 5.68.

Additional credit risk disclosure

The global fixed Income funds invest in domestic and international markets including developed and emerging markets sovereign debt. While the funds themselves have not been rated by any nationally recognized rating agency, most of their investments are rated as discussed above.


25

4. Actuarial Assumptions

The Actuarially Determined Contribution (ADC) is calculated annually by an independent actuary using information furnished by METRO and actuarial assumptions approved by the Plan’s Committee.

Actuarial Methods and Assumptions Used for Valuation and Determining The ADC

Valuation date January 1, 2015 Measurement date December 31, 2015 Actuarial cost method Entry Age Normal Amortization Method Level percent or level dollar Level dollars Closed, open, or layered periods Closed Amortization Period at 1/1/2015 28 years Asset Valuation method Smoothing period Five-year smoothed fair value Recognition method Non-asymptotic Inflation rate 2.5% Salary increase 2.5% per annum

Discount rate 6.75% Cost of living adjustment None Retirement Age

0BSee retirement rates in January 1, 2015 valuation report 1Blocated in the Actuarial Section of this report

Mortality 2BRP-2000 Mortality for Employees, Healthy Annuitants, and Disabled Annuitants with projection to 2015 per Scale AA

Actuarially assumptions were similar to last year with the exception of the mortality table which was updated to the 2015 per Scale AA

Actuarial assumptions used in the annual actuarial evaluation process represent the best estimates of Plan management, as approved by the MTA/TWU Union Pension Board of Trustees (Trustees), and reflect a long-term perspective while reducing short-term volatility. Since the actuarially determined contribution to the Plan is based on these actuarial assumptions, including the cost method used by the actuary, any future changes to those assumptions or the cost method may affect the future funded status and funding progress of the Plan. The Plan has not performed a formal actuarial experience study in the current year; however, as noted in note 10, an experience study was performed in 2016.

5. Net Pension Liability and Sensitivity Analysis

The following tables were taken from the independent actuary’s GASB 67 Disclosure Report dated July 13, 2016. This report, along with the actuary’s certification letter is included in the actuarial section of the CAFR.


26

The net pension liability represents the total pension liability which is the actuarial present value of benefits payable to participants as of the valuation date reduced by the Plan’s year-end net position restricted for pension. These amounts consisted as of:

December 31,

2015 December 31,

2014 Total pension liability $ 383,569,323 $ 346,901,384 Plan’s fiduciary net position 224,361,146 229,990,069 Net pension liability $ 159,208,177 $ 116,911,315 Plan’s fiduciary net position as a % of total pension liability

58.49%

66.30%

The sensitivity analysis schedule, provided below, is used to evaluate the effect on the total pension liability and related net pension liability for a 1 percent change in the discount rate as of December 31, 2015.

1% Decrease to

5.75%

Current Discount Rate

of 6.75%

1% Increase to

7.75% Total pension liability $ 428,409,939 $ 383,569,323 $ 345,814,526 Plan’s fiduciary net position 224,361,146 224,361,146 224,361,146 Net pension liability $ 204,048,793 $ 159,208,177 $ 121,453,380

Significant actuarial assumption used to calculate the net pension liability was:

Inflation rate 2.3% Salary increase 2.5% Discount rate 6.75% Net Investment rate of return 6.75% Actuarial cost method Entry Age Normal Closed, open, or layered

Closed

Mortality The RP-2014 Mortality adjusted backwards to 2006 with MP-2014 projected forward (fully generational) with MP2015. Separate tables were used for males/females

The listed actuarial assumption were the same used in 2014 with the exception of the mortality table and updates to the disability, withdrawal, and retirements rates as determined by the experience study completed in early 2016 and discussed in note 10 below.

6. Federal Income Tax The Plan received its latest favorable letter of determination dated July 9, 2014 from the Internal Revenue Service stating that the Plan qualifies as a tax-exempt plan and trust. The Plan’s management believe the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code.


27

Accounting principles generally accepted in the United States of America require the Plan’s management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. The Plan’s management has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2015 and 2014, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the Plan’s financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

7. Risks and Uncertainties

Investment securities are exposed to various risks, as discussed in note 3 above, including market volatility. Significant changes in the value of investments can have a direct and material effect on the net asset value of the Plan and the amount of the unfunded actuarial accrued liabilities. The Trustees have taken steps to minimize these risks by maintaining a diversified investment portfolio and hiring professional money managers and other consultants.

The actuary, as discussed in notes 4 and 5above, used actuarial assumptions when calculating the Plan’s funding requirements, pension liability and other actuarial information. Due to uncertainties inherent in the estimation and assumptions process, it is at least reasonably possible that changes in these actuarial assumptions in the near term could be material to the Plan’s financial statements.

8. New Accounting Pronouncements

Governmental Accounting Standard Board (GASB) routinely issues new accounting and reporting statements which become effective in future years. The following list reflects those statements which may impact the accounting and reporting for pension plans and include:

GASB Statement Number Effective Date

72 - Fair Value Measurement and Application Reporting periods beginning after June 15, 2015

73 - Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68

Reporting periods beginning after June 15, 2015

76 - The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments


79 - Certain External Investment Pools and Pool Participants Reporting periods beginning after June 15, 2015

82 - Pension Issues—an amendment of GASB Statements No. 67, No. 68, and No. 73,


Plan’s management is currently evaluating these new pronouncements to determine the impact, if any, on the accounting and reporting of the Plan’s financial activities.


28

9. Contingency The Plan’s submission of its 2015 CAFR to the Texas Pension Review Board (TPRB) will be late by approximately 30 days past the required filing due date which is 211 days after the Plan’s calendar year end. The TPRB was notified of this delay and in the best judgment of Plan’s management, no penalties are expected. This delay relates to the actuary completing the experience study which included updating the mortality table.

10. Subsequent Events

The Plan’s independent actuary completed a formal actuarial experience study during 2016. Based on this study, the Plan’s net pension liability calculated under GASB 67 and 68 for December 31, 2015 used the RP-2014 Mortality Table adjusted backwards to 2006 with MP-2014 projected forward (fully generational) with MP2015. Separate tables were used for males/females. In addition, the disability, withdrawal and retirements rates were updated. These changes will be included in the January 1, 2016 valuation used to determine the ADC valuation.

The Plan’s management has evaluated subsequent events through August 29, 2016; the date the Plan’s financial statements were available to be issued. No changes were made, or are necessary to be made, to the Plan’s financial statements, as a result of this evaluation.

29

30

Required Supplemental Information


Schedule of Changes in Net Pension Liability (Unaudited)

December 31, 2015

December 31, 2014

Total pension liability Changes for the year Service cost $ 5,549,985 $ 5,435,165 Interest on total pension liability 24,786,145 22,446,888 Effect of economic /demographic gains/losses (2,780,567) - Effect of assumptions changes or inputs 25,679,785 - Benefit payments (16,567,409) (15,923,974) Net change in total pension liability 36,667,939 11,958,079 Total pension liability - beginning 346,901,384 334,943,305 Total pension liability - ending 383,569,323 346,901,384 Plan fiduciary net position Contributions from the employer 19,062,423 13,477,182 Net investment income (7,809,891) 8,434,984 Benefit payments (16,567,409) (15,923,974) Administrative expenses (314,046) (319,754) Net change in plan fiduciary net position (5,628,923) 5,668,438 Plan fiduciary net position – beginning 229,990,069 224,321,631 Plan fiduciary net position – ending 224,361,146 229,990,069 METRO’s net pension liability ending

$ 159,208,177

$ 116,911,315

Plan fiduciary net position as a percentage of the total pension liability

58.49%

66.30%

Covered-employee payroll $ 93,227,967 $ 92,277,465 METRO’s net pension liability as a percentage of covered employee payroll

170.77%

126.70%

Notes:

(1) Actuarial assumptions used to determine pension liability is presented in in note 5 to the basic financial statements.

(2) GASB Statement No.67 permits plans to present the ten years historical information prospectively until such information is available.

31

Required Supplemental Information


Schedule of Employer Contributions For the Last 10 Years

(Unaudited)

Fiscal Year Ending

December 31,

Actuarially Determined Contribution

Actual

Employer Contribution

Excess Contributions

Covered Payroll

Contribution as a % of Covered Payroll

2015 $ 15,410,109 $ 19,062,423 $ 3,652,314 $ 93,227,967 20.45% 2014 13,477,182 13,477,182 - 92,277,465 14.61% 2013 14,335,058 14,335,058 - 91,830,000 15.61% 2012 14,444,476 14,444,476 - 94,043,000 15.36% 2011 13,493,650 13,493,650 - 93,675,000 14.40% 2010 12,416,838 12,416,849 11 88,184,000 14.08% 2009 12,185,737 12,185,737 - 85,317,000 14.28% 2008 8,826,606 8,826,606 - 84,414,000 10.46% 2007 8,527,492 16,527,492 8,000,000 81,287,000 20.33% 2006 9,402,722 17,540,722 8,138,000 82,900,000 21.16%

Note: Actuarial assumptions used to determine actuarially determined contribution is presented in note 4 to the basic financial statements.


Schedule of Money-Weighted Rate of Returns For the last 9 years

(Unaudited)

December 31

Net Money-Weighted Rate of Return

2015 (3.38) 2014 4.24 2013 16.91 2012 16.23 2011 0.11 2010 16.52 2009 29.60 2008 (31.66) 2007 6.58

Note: 10 years of information were not available due to change in actuary.

32

33

Other Supplemental Information (Unaudited)


Schedule of Investment and Administrative Services for the Years Ended December 31, 2015 and 2014

Type 2015 2014 Investment services Direct payments to money managers: Brandywine $ 243,866 $ 291,536 GMO (10,354) (10,127) GW Capital 53,858 84,494 Alliance Bernstein 205 123 HAHN 67,890 - SSgA Advisor-R1000 19,047 (16,736) SSgA Advisor-R2000 3,637 - Rhumbline Russell 1000 Large Capital Core (1,129) - Rhumbline Core Bond Pool Trust 129,050 - Rhumbline Russell 1000 Large Capital Value 35,417 - Rhumbline Russell Mid Capital Growth 115 - Morgan Dempsey 124,267 180,422 Herndon Capital Management 57,465 231,413 LSIA Equal Weighted Index 11,529 8,453 Brown Large Cap Growth 54,929 180,814 Total of money managers 789,792 950,392 Financial advisor Gray and Company 15,750 63,000 Financial advisor Marquette Associates, Inc. 46,800 - Total investment services 852,342 1,013,392 Administrative services: Audit Services - McConnell & Jones/ KPMG 44,252 21,782 Legal counsel- Norton, Fulbright & Rose L.L.P 8,694 26,798 Custodian and disbursement agent – State Street

191,510 184,935 Actuary- Milliman, Inc. 68,494 82,344 Other 1,096 3,895 Total administrative services 314,046 319,754 Total investment and administrative services $ 1,166,388 $ 1,333,146

Note: Direct administrative supporting costs are absorbed by METRO and are not borne by the Plan. Hence, such costs were excluded from this schedule.

34

METRO Provides Door To Door Service for Those with

Special Transportation Needs

35

Investment Section (Unaudited)

Information used to develop this section includes: the Plan’s investment policy, independently audited financial reports of the commingled and mutual fund money managers and the year-end performance report issued by Marquette Associates, Inc. the Plan’s financial advisor.

Metropolitan Transit Authority 2015 Transport Workers Union Pension Plan, Local 260, AFL-CIO

36

Overview of the Investment Policy

General

The Trustees’ responsibilities include establishing, implementing and updating an investment policy which provides the framework for making and monitoring investment performance. A copy of this policy can be obtained by contacting METRO’s Office of the Controller. Key points of the policy include:

1. Establish reasonable expectation, objective and guidelines for the investment of the assets in the Plan.

2. Create the framework for a well-diversified asset mix that can be expected to generate achievable long-term returns at a level of risk acceptable to the Plan, including:

• Describing an appropriate risk posture for the investments. • Specifying broad target asset allocation ranges and constraints. • Establishing investments guidelines regarding the selection of investments managers,

permissible securities and diversification of assets. • Specifying the criteria for evaluating and reporting on the performance of the Plan’s

investment managers. 3. Defines the responsibilities of the Trustees, financial advisor, money managers and plan

administrator. 4. Encourage effective communication between all participants.

Financial advisor

The financial advisor is responsible for assisting in the development and implementing the investment policy while monitoring the performance of the money managers and the overall markets where investments are made. The Trustees replaced Gray and Company during June 2015 with Marquette Associates, Inc.

Investment objective

The Trustees invest using a long-term view with the objective of achieving the actuarial rate of return of 6.75 percent net of related investment fees. A period of five to seven years is used in measuring progress toward achieving this objective. Returns on the traditional asset classes within the Plan’s investment pool (Total Domestic Equity and Total Fixed Income) should exceed the return on a composite of non-managed market indices weighted in proportion to the actual structure of the Plan’s portfolio. Generally, the investment portfolio should benefit from active management.

Marketability and investment values

Investments are limited to those that are readily marketable with the exception of certain categories such as real estate, and certain alternative investments. No investment should be made in non-marketable securities without prior approval from the Trustees.

Asset values are generally established based on national securities exchange with specific valuation approaches discussed within the description of active money managers portion of this section.


37

Diversification

To ensure effective diversification the Trustees allocate funds to various asset classes and money managers that invest in different markets using various investment strategies as discussed in the following pages.

During 2015 the Trustees modified the investment policy to reflect the following type and range of investments.

Allocation Asset Class Target Range Domestic equities 27% 17-37% International equities 24% 14-34% Hedge funds 4% 0-9% Real estate 10% 5-15% Global fixed income 35% 25-45%

The actual allocation of assets as of December 31, 2015, in thousands, complied with the investment guidelines as reflected in the following table with the exception of real estate which continues to be evaluated.


Global Fixed Income,

$74,038 , 39%

Domestic Equities , $88,585 , 46%

International Equities ,

$28,639 , 15%

38

Current Money Managers

In addition to asset allocation, money managers are essential in earning adequate investment returns. The Plan ended the year with ten money managers that are responsible for implementing the investment policy and related strategy by directly purchasing/selling investments. The Committee and financial advisor follow a stringent money manager selection process some of which include: evaluating investment strategy and investment team continuity, reviewing performance history, performing on-site visits, and conducting multiple interviews. Only upon completion of this process will the Committee vote on the final selection of a money manager.

All money managers are required to accept the role of a fiduciary as defined by the Employee Retirement Income Security Act. To ensure a diversified investment portfolio, the Committee selects money managers that invest in different parts of the worldwide markets using different investment strategies.

During 2015 the Committee elected to reallocate investments which included:

Reallocation

of Investments (000)

Terminated money managers LSIA Equal Weighted index $ (19,866) Herndon Large Capital Value ( 36,237) GW Capital Small Capital (8,159) Morgan Dempsey Small Capital (11,619) Brown Advisory Large Capital Growth (32,336) SSgA 1000 Growth - Index (6,946) Reduction in investment balance Brandywine - Global Opportunistic Fixed Income (32,000) Total $ (147,163) New money managers for 2015 Rhumbline Russell 1000 Large Capital Core 25,002 Rhumbline Russell 1000 Large Capital Value 8,760 Rhumbline Russell Mid Capital Value 8,760 SSgA Russell 2000 Small Cap Core 18,779 Rhumbline Core Bond Pooled Trust 32,000 Hahn Mid-Cap Value 22,500 Administration cash account 31,362 Total reallocation of investments for 2015 $ 147,163 Final reallocation of investments was completed on January 7, 2016 and included:

Administration cash account $ (22,000) SSgA MSCI EAFE Small Capital Non-U.S. Core 11,000 SSgA Disciplined Emerging Markets Equity Fund 11,000 $ - Metropolitan Transit Authority 2015 Transport Workers Union Pension Plan, Local 260, AFL-CIO

39

Individual money managers, their market segment, investment approaches, asset custodians, recordkeeping and independent audits are discussed below.

Domestic equity

Rhumbline Russell 1000 Large-Cap Core index portfolio is managed to track as close as practical to the related index. State Street Bank and Trust Company provides custodial and recordkeeping services. The annual financial report was audited by BKD LLP, CPAs & Advisors.

Rhumbline Russell 1000 Large Capital Value index portfolio is managed to track as close as practical to the related index. State Street Bank and Trust Company provides custodial and recordkeeping services. The annual financial report was audited by BKD LLP, CPAs & Advisors.

Rhumbline Russell Mid-Capital Growth index portfolio is a separately managed account which is designed to track as closely as practical to the related index. The Plan’s asset custodian, State Street Bank and Trust Company, provides custodial and recordkeeping services.

SSgA Russell 2000 Index Securities Lending Fund: Small-Cap Core tracks as closely as practical to the related index. Street Bank and Trust Company, the Plan’s asset custodian, provides custodial and recordkeeping services. The annual financial report was audited by Ernst & Young, LLP.

International equity (mutual funds)

T. Rowe Price Institutional International Growth Equity Fund (IGEF) is a diversified, open-end management investment company and is one of the portfolios established by T. Rowe Price Institutional International Funds, Inc. and registered under the Investment Company Act of 1940. The IGEF commenced operations on September 7, 1989 and seeks long-term growth of capital through investment primarily in common stocks of established non U.S. companies. Annual financial reports were audited by PricewaterhouseCoopers LLP with JP Morgan Chase London providing asset custodial services.

Investments are valued at fair value as listed or regularly traded on a security exchange or in the case of over-the-counter (OTC) markets are valued at the last quoted sale price or, for certain markets, the official closing price at the time the valuations are made, except for OTC Bulletin board securities which are valued at the mean of the latest bid and asked prices. A security that is listed or traded on more than one exchange is valued at the quotation on the exchange determined to be the primary market for the security. Listed securities not traded on a particular day are valued at the mean of the latest bid and asked prices for domestic securities and the last quoted sale price for international securities. This information is used when calculating the net asset value per unit.

Thomas White International Fund Investor Class is designed to benefit from opportunities for future economic growth in developed countries outside the United States, as well as the world’s emerging market countries. Portfolio holdings are principally in securities issued by large companies located in non-U.S. markets, or whose businesses are closely associated with overseas markets. The investment portfolio of the fund may also include securities issued by smaller companies. This is an open end mutual fund and was established in June 1994. The annual financial report was audited by Deloitte & Touche LLP with the Northern Trust Company providing custodial services. Metropolitan Transit Authority 2015 Transport Workers Union Pension Plan, Local 260, AFL-CIO

40

Securities are listed or traded on a recognized national or foreign stock exchange or NASDAQ and valued at the last reported sales price on the principal exchange on which the securities are traded. Over-the-counter securities and listed securities for which no closing sale price is reported are valued at the mean between the last current bid and asked price. Securities and assets for which quotations are not readily available, including restricted securities and securities purchased in private transactions, may be valued based on recent bid/ask prices or sales prices reported by third party sources such as publications and broker-dealers or valued at their fair value in the best judgment and sole discretion of the Administrator with the oversight of the Investment Manager.

Global fixed income

Rhumbline Core Bond Pooled Trust is managed to track as close as practical to the Barclays Aggregate Bond index. State Street Bank and Trust Company is the trustee and provides custodial and record-keeper services. The annual financial reports were audited by BKD LLP, CPAs & Advisors.

GMO Emerging Country Debt Investment Fund PLC (GMO) is a limited liquidity investment company created under the laws of Ireland as a public limited company pursuant to the Companies Acts, 1963 to 2013. It was incorporated on May 20, 2003, under registration number 371261. The investment objective of GMO is to achieve higher total returns by investing at least 50 percent of its net assets in government securities of emerging countries, related derivatives securities and in GMO Alpha LIBOR (Offshore), L.P., Series (ALP-B), a Bermuda exempted limited partnership. The fund may also hold securities by investing in other collective investment schemes. Annual financial statements were audited by PricewaterhouseCoopers, Chartered Accountants and Statutory Audit Firm Dublin, Ireland. Asset custodial and recordkeeping services are provided by State Street, Ireland.

Investments are valued at fair value using official closing price or last sales price on the primary exchange or market where the investments are traded. The asset custodian will use State Street Fund Services (Ireland) Limited (the Administrator) to independently determine fair value when information is not available or the amount currently reported may not be representative of fair value. This information is used when calculating the net asset value per share.

Brandywine Global Opportunistic Fixed Income Fund (BGOFIF) is a separate portfolio of the Brandywine Global Investment Management Trust (the Trust). The Trust was organized on May 1, 2006 by Brandywine Global Investment Management, LLC, a corporation organized under the laws of the state of Delaware, and registered as an investment advisor under the Investment Advisor Act of 1940. The Trust was organized with the objective of achieving interest income, long-term capital appreciation by investing in U.S. fixed income, and developing and emerging markets sovereign debt securities. Annual financial statements of BGOFIF were audited by Kreischer Miller with the trustee of the fund, BNY Mellon, providing custodial and recordkeeping services.

Investments are valued at fair value based on market valuations provided by independent pricing services or based on values determined in good faith by the investment advisor. This information is used when calculating the net asset value per unit.


41

Proxy Voting

The Investment Policy requires investment managers to vote in the best interest of the Plan and must be able to support all proxy voting in written format as requested. Investment Values and Returns

The following schedules were developed from information provided by the Plan’s financial advisor, Marquette Associates, Inc. and represents information included in the quarterly reporting package provided to the Committee.

Fair values of investments by asset class, money manager and market segment with related changes between 2015 and 2014 (in thousands) were:

Money managers and investments

2015 2014 Change Domestic equity SSgA 2000 Value-Index $ 27,098 $ 8,294 $ 18,804 HAHN Capital 20,265 - 20,265 RhumbLine Russell 1000 24,161 - 24,161 RhumbLine Russell 1000 Value 8,543 - 8,543 RhumbLine Mid-Cap Growth 8,546 - 8,546 SSgA 1000 Growth-Index - 6,607 (6,607) GW Capital Small Capital Equity - 8,464 (8,464) Morgan Dempsey Small/Micro Capital Equity - 12,531 (12,531) Herndon Large Capital Value - 33,372 (33,372) LSIA Equal Weighted Index - 19,577 (19,577) Brown-Large Capital Growth - 29,873 (29,873) Total domestic equity 88,613 118,718 (30,105) International equity – mutual funds T. Rowe Price Institutional International Growth Equity 15,189 15,297 (108) Thomas White International 13,450 13,916 (466) Total international equity - mutual funds 28,639 29,213 (574) Global-fixed Income RhumbLine Core Bond Pooled Trust 31,779 - 31,779 Brandywine- Global Opportunistic Fixed Income 29,515 66,634 (37,119) GMO Emerging Country Debt 12,744 12,826 (82) Total global fixed income 74,038 79,460 (5,422) Total net investments $ 191,290 $ 227,391 $ (36,101)


42

Asset values and related portfolio percentages by asset class, and money managers and market segment as of December 31, 2015 were:

I

Fair Value (000)

Percent of Portfolio

Money managers Domestic equity SSgA 2000 Value-Index $ 27,098 14.17 Hahn Capital 20,265 10.59 RhumbLine Russell 1000 24,161 12.63 RhumbLine Mid-Cap Growth 8,546 4.47 RhumbLine Russell 1000 Value 8,543 4.47 Total domestic equity 88,613 46.33 International equity – mutual funds T. Rowe Price International Growth Equity 15,189 7.94 Thomas White Int’l 13,450 7.03 Total International equity mutual funds 28,639 14.97

Global fixed Income RhumbLine Core Bond Pooled Trust 31,779 16.61 Brandywine Global Opportunistic Fixed Income 29,515 15.43 GMO Emerging Country Debt 12,744 6.66 Total global fixed income 74,038 38.70 Total net investments $ 191,290 100.00

The five largest equity holdings for all money managers included:

Company Fair value

(000) % of

Portfolio

Kroger $ 1,084 0.9 Ross Stores 1,057 0.9 Partnerree 979 0.8 Euronet WWD. 934 0.8 Hexcel 929 0.8

A complete listing of investment can be obtained by contacting METRO’s Office of the Controller. Metropolitan Transit Authority 2015 Transport Workers Union Pension Plan, Local 260, AFL-CIO

43

The following schedule reflects the investment returns for the total Plan and by money managers as of December 31, 2015 with comparisons to their primary benchmark. Investment returns were calculated by the Plan’s financial advisor using the time weighted method and represents those money managers active as of December 31, 2015.

Periods Ending 12/31/2015

Last

Quarter 1 Year 2 Years 3 Years 5 years

Total Returns for the Plan (net of fees) 2.6 (3.4) 0.3 5.4 6.0 Policy Index 3.2 (1.7) 1.8 6.6 - Over (under) performance (0.6) (1.3) (1.5) (1.2) - Returns by Money Manager (net of fees)

RhumbLine Core Bond Pooled Trust (funded Dec 2015) - - - - - Barclays Aggregate (0.6) - - - - Over (under) performance - - - - - Brandywine – Global Opportunistic Fixed Income (0.6) (8.4) (1.3) (2.1) 3.0 Citigroup WGBI Unhedged Index benchmark (1.2) (3.6) (2.0) (2.7) (0.1) Over (under) performance 0.6 (4.8) 0.7 0.6 3.1 GMO Emerging Country Debt 2.2 (0.6) 2.2 1.2 7.0 The JP Morgan – Emerging Market Bond I benchmark 1.5 1.2 3.4 (0.1) 5.1 Over (under) performance 0.7 (1.8) (1.2) 1.3 1.9 Rhumbline Russell 1000 Index Fund 6.5 - - - - Russell 1000 benchmark 6.5 0.9 6.9 15 12.4 Over (under) performance 0.00 - - - - Hahn Capital Management 0.9 - - - - Russell Mid Capital Value benchmark 3.1 (4.8) 4.5 13.4 11.3 Over (under) performance (2.2) - - - - SSgA Russell 2000 Index Fund 3.7 (4.4) 0.2 11.7 9.2 Russell 2000 benchmark 3.6 (4.4) 0.1 11.7 9.2 Over (under) performance 0.1 - 0.1 - - T. Rowe Price International Growth Equity 4.0 (0.7) (0.8) 4.0 3.2 MSCI ACWI ex US (Net)benchmark 3.2 (5.7) (4.8) 1.5 1.1 Over (under) performance 0.8 5.0 4.0 2.5 2.1 Thomas White Int'l 5.3 (3.4) - - - MSCI ACWI ex US (Net) benchmark 5.2 (5.7) (4.8) 1.5 1.1 Over (under) performance 0.1 2.3 - - -


44

Net returns by major asset class

Net Returns by Market Segment Last

1

2 Years 3

5 Years Total equity 4.2 (1.8) 0.6 9.1 7.2 Large capital equity 6.1 2.3 4.5 12.8 9.6 Small capital equity 2.5 (8.8) (5.1) 7.0 9.2 International equity 4.6 (2.0) (2.7) 2.7 2.4 Global fixed income 0.3 (6.8) (0.6) (1.4) 3.7

The investment returns were calculated using the time-weighted (geometric) method. This method calculates the average rate per period on an investment that is compounded over multiple periods.

A complete listing of all investments owned by the Plan can be obtained by contacting METRO’s Office of the Controller.

Trading Fees and Commissions for 2015

Broker Name

Amount of Trading Fees and

Commission

Number of Shares

Commission Per Share

Abel Noser Corporation

$ 448

14,944

$ 0.0300 Able Noser

1,496

50,434

0.0297

Autrepat-Stk/$ Div

-

4

0.0000 Avondale Partners LLC

123

6,155

0.0200

Barclays Capital Le

1,381

46,024

0.0300 Bloomberg Tradebook LLC

839

32,234

0.0260

Btig, LLC

30,615

714,684

0.0428 Cabrera Capital Markets

212

10,624

0.0200

Cantor Fitzgerald + Co.

747

37,365

0.0200 Capital Institutional Svcs Inc Equities

1,994

99,687

0.0200

Citigroup Global Markets Inc

1,069

35,632

0.0300 Convergex Execution Solutions LLC

174

8,675

0.0200

Credit Research + Trading LLC

738

36,910

0.0200 Credit Suisse Securities (USA) LLC

660

22,196

0.0297

Csi Us Institutional Desk

41

2,061

0.0200 Davidson D.A. + Company Inc.

130

6,491

0.0200

Deutsche Bank Securities Inc

157

135,298

0.0012 Goldman Sachs + Co

1,022

34,078

0.0300

Goldman Sachs International

4,319

216,248

0.0200 Income Reinvestment

-

9,213

0.0000

Metropolitan Transit Authority 2015Transport Workers Union Pension Plan, Local 260, AFL-CIO

45

Broker Name

Amount of Trading Fees and

Commission

Number of Shares

Commission Per Share

Instinet 5,584 554,717 0.0101 Investment Technology Group Inc. 3,122 182,681 0.0171 ISI Group Inc 2,246 74,878 0.0300 J. Bush &Co.Thru Aisle 370

5

270

0.0200

J.P. Morgan Clearing Corp.

128

6,383

0.0200 J.P. Morgan Securities Inc.

1,975

77,651

0.0254

Jefferies + Company Inc

200

8,961

0.0223 Jmp Securities

24

1,200

0.0200

Johnson Rice + Co

292

14,605

0.0200 Jonestrading Institutional Services LLC

565

19,531

0.0289

Keefe Bruyette + Woods Inc

639

21,284

0.0300 Keybanc Capital Markets Inc

393

13,087

0.0300

Leerink Partners LLC

58

1,946

0.0300 Liquidnet Inc

15

1,526

0.0100

Loop Capital Markets

23

1,128

0.0200 Mandatory Exchange Non Cash

-

60

0.0000

Merger

-

10,074

0.0000 Merger Non Cash

-

46,744

0.0000

Merrill Lynch Pierce Fenner + Smith Inc

1,314

59,809

0.0220 Morgan Stanley Co Incorporated

1,302

44,981

0.0289

Name Change Non Cash

-

204

0.0000 Non Cash Use Only

-

(320)

0.0000

Oppenheimer + Co. Inc.

372

12,411

0.0300 Pershing Llc

146

7,301

0.0200

Raymond James And Associates Inc

86

2,865

0.0300 RBC Capital Markets

490

42,437

0.0116

Robert W.Baird Co.Incorporate

746

24,860

0.0300 Sale Of Fractional S

-

7

0.0000

Sanford Cbernstein Co LLC

387

13,509

0.0287 Shorterm Cap Gain Reinvest

-

354

0.0000

Stifel Nicolaus + Co Inc

287

9,573

0.0300 Strategas Securities LLC

3,875

387,478

0.0100

Sturdivant And Co., Inc.

198

6,595

0.0300 UBS Securities LLC

803

31,950

0.0251

Wells Fargo Securities, LLC

1,494

282,832

0.0053 William Blair & Company L.L.C

142

4,736

0.0300

$ 73,076

3,487,265

$ 0.0210


46

Helping to Make Life Better For the Community

47

Actuarial Section

(Unaudited)

Actuarial assumptions and funding requirements are reviewed for reasonableness by the Committee and METRO each year during discussions with the independent actuary. The first part of this section includes selected information for three years taken from previous actuarial valuation reports. The second part of this section includes the January 1, 2015 independent actuarial report and the GASB 67 and 68 Discloser Report for the Fiscal Year October 1, 2015 to September 15, 2016. Both of these reports were prepared by Milliman, Inc. State law requires the actuary’s report along with the independently audited annual financial report be filed each year with the Pension Review Board. In addition, the actuarial assumptions must be independently audited by a different actuary every five years and their report reviewed by the Committee, METRO, and the Plan’s independent actuary. This report must also be sent to Pension Review Board. The Plan implemented Governmental Accounting Standard Board Statement No. 67 Financial Reporting for Pension Plans. This new standards modified the financial statements, disclosure requirements, supplemental information and requires the use of the entry age actuarial costing method. Under this standard, a depletion analysis must be developed to determine if the projected cash inflows from contributions and investment returns will be adequate to meet benefit payments. The projected investment rate of return must be reduced when cash flows are inadequate. Based on this analysis, no reduction to the 6.75% projected investment rate of return was required An overview of the Plan is discussed in Note 1 to the Basic Financial Statements.


48

Multi-year Information from Previous Actuarial Reports

The estimated investment returns on the fair value of assets assumes all cash flows of contributions, benefit payments, and all administrative expenses are paid at mid-year. The estimated investment returns on the fair value of assets for the last three years were:

January 1, 2015 January 1, 2014 January 1, 2013 Beginning fair value of assets $ 224,546,800 $ 193,489,244 $ 167,130,346 Net non-investment cash flows (3,779,938) (1,540,419) (710,842) Investment income 9,223,207 32,597,975 27,069,740 Ending fair value of assets $ 229,990,069 $ 224,546,800 $ 193,489,244 Approximate investment return 4.14% 16.91% 16.23%

The estimated investment return on the actuarial value of assets is determined for the schedule of MB of IRS Form 5500 using a simplified formula as specified in the form instructions. It assumes all cash flows of the contributions, benefit payments, and administrative expenses are paid at mid-year. The estimated investment returns on the actuarial value of assets for the last three years were: January 1, 2015 January 1, 2014 January 1, 2013 Beginning actuarial value of assets $ 206,052,122 $ 181,660,677 $ 173,837,727 Net non-investment cash flows (3,779,938) (1,540,419) (710,842) Investment income 21,696,923 25,931,864 8,533,792

Ending actuarial value of assets $ 223,969,107 $ 206,052,122 $ 181,660,677 Estimated investment return 10.63% 14.34% 4.92%

The Unfunded Actuarial Accrued Liability represents the balance of the present value of benefits that is allocated to employees’ service before the current plan year and not yet funded. The balances and related components for the last three years were:

Actuarial accrued liability January 1,

2015 January 1,

2014 January 1,

2013 Active participants $ 169,936,537 $ 122,315,347 $ 122,225,939 Terminated vested participants 27,081,320 22,000,677 21,416,227 Deferred participants 384,487 384,989 380,480 Retired participants 124,611,652 113,957,461 103,437,940 Disabled participants 18,364,439 13,626,450 15,137,208 Beneficiaries 11,228,891 7,674,201 4,761,636 Total 351,607,326 279,959,125 267,359,430

Actuarial value of assets 223,969,107 206,052,122 181,660,677 Unfunded actuarial accrued liabilities $ 127,638,219 $ 73,907,003 $ 85,698,753 Metropolitan Transit Authority 2015 Transport Workers Union Pension Plan, Local 260, AFL-CIO

49

Normal cost is the amount allocated to the current year using the Plan’s actuarial cost method. This method changed from the projected unit credit to the entry age normal starting with the January 1, 2015 actuarial valuation report. Normal cost for the last three years consisted of:

Entry Age

Normal

Projected Unit Credit

Normal cost January 1,

2015 January 1,

2014 January 1,

2013 Withdrawal $ 377,068 $ 230,093 $ 239,701 Early retirement 78,848 112,588 114,651 Unreduced retirement 2,973,102 4,654,859 4,709,360 Death 56,726 74,380 76,770 Disability 816,907 876,852 899,235 Total 4,302,651 5,948,772 6,039,717 Loading for expense 518,280 397,288 184,966

Total normal cost $ 4,820,931 $ 6,346,060 $ 6,224,683

Schedule of retirees and beneficiaries added to and removed from rolls:

%

Increase in Monthly Allowance

Average Annual

Allowance

Added to Rolls Removed from Rolls Rolls-End of Year

Year Ended December 31 Number

Annual Benefits

Number Annual Benefits

Number Annual Benefits

2015 122 $1,379,092 (53) $(518,858) 1,496 $16,547,130 5.48% $ 11,061 2014 100 1,073,271 (29) (334,136) 1,427 15,686,896 4.94% 10,993 2013 234 2,185,278 (105) (940,941) 1,356 14,947,761 9.08% 11,023 2012 122 1,646,982 (54) (661,938) 1,227 13,703,424 7.75% 11,168 2011 123 1,548,895 (34) (443,119) 1,159 12,718,380 9.52% 10,974 2010 91 1,224,707 (41) (362,651) 1,070 11,612,604 8.02% 10,853 2009 89 1,268,338 (41) (262,306) 1,020 10,750,548 10.32% 10,540 2008 119 987,845 (97) (832,909) 972 9,744,516 1.62% 10,025


50

Solvency Test Actuarial Accrued Liability ( AAL) Portion of AAL Covered by Assets

Valuation Date

January 1

Retirees and Beneficiaries

Active and Inactive

Members

Total

Actuarial Value

of Assets

Retirees and Beneficiaries

Active and Inactive

Members

Total 2015 $ 181,670,789 $ 169,936,537 $ 351,607,326 $ 223,969,107 100% 24.9% 63.7% 2014 157,643,778 122,315,347 279,959,125 206,052,122 100% 39.6% 73.6% 2013 145,133,491 122,225,939 267,359,430 181,660,667 100% 29.9% 67.9% 2012 134,860,787 120,692,122 255,552,909 173,837,727 100% 32.3% 68.0% 2011 123,380,792 117,637,323 241,018,115 168,963,695 100% 38.7% 70.1% 2010 116,246,146 110,844,693 227,090,839 162,389,627 100% 41.6% 71.5% 2009 105,030,996 99,653,868 204,684,864 131,281,462 100% 26.3% 64.1%


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52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

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110

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112

113

Statistical Section

(Unaudited)

The statistical section provides additional financial trend and participants was developed from information provided by the Plan’s administrator, actuarial and audited financial reports.

114


Schedule of Benefit Payments to Participants For the Last 10 Years

End of Year

Participants Receiving Benefits

Payments (in thousands)

Approximate Annual Benefit

December 31 2015 1,496 $ 16,567 $ 11,074 December 31 2014 1,427 15,924 11,159 December 31 2013 1,356 14,887 10,922 December 31 2012 1,227 13,475 10,982 December 31 2011 1,159 12,432 10,726 December 31 2010 1,070 11,618 10,858 December 31 2009 1,020 10,558 10,351 December 31 2008 972 9,403 9,674 December 31 2007 950 9,290 9,779 December 31 2006 951 8,265 8,691

Participants receiving benefits continue to increase as more employees are reaching eligible retirement age. Benefit payments are based on years of credited services time a fixed rate as reflected in the next table.

August 1, 2002 through July 31, 2003 $ 50 August 1, 2003 through July 31, 2004 51 August 1, 2004 through July 31, 2005 52 August 1, 2005 through July 31, 2006 53 August 1, 2006 through July 31, 2007 53 August 1, 2007 through January 31, 2009 54 February 1, 2009 through present 60

115


Schedule of Participants by Status For the Last Ten Years as of January 1, 2015

Participants 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

Active 2,108 2,241 2,274 2,504 2,552 2,502 2,540 2,464 2,444 2,447 Terminated and vested 560 555 607 591 578 591 535 434 326 323 Retired 986 1018 925 862 777 899 824 950 951 843 Disabled 209 175 194 205 205 53 53 - - - Beneficiaries 247 177 108 92 88 68 95 - - -

Total participants 4,110 4,166 4,108 4,254 4,200 4,113 4,047 3,848 3,721 3,613

It is expected the number of participants will continue declining as the Plan is closed to new members and the census population review/adjustments has been completed. Prior to 2009 disabled and beneficiary were combined with retirees.

Schedule of Benefit Payments by Types For the Last Ten Years as of December 30, 2015

(thousands)

Types of Benefit Payment 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Service $13,503 $12,345 $11,938 $10,779 $ 9,724 $ 9,080 $ 9,565 $ - $ - $ - Disabled 1,930 1,995 1,624 1,794 1,902 1,890 442 - - - Beneficiary 1,134 1,018 732 462 371 363 275 - - - Lump sum - 566 593 440 435 285 276 - - -

$16,567 $15,924 $14,887 $13,475 $12,432 $11,618 $10,558 $ - $ - $ -

Benefit payments continue to increase as more individual retiree. Information prior to 2009 was not available due to change in actuary.

116

Metropolitan Transit Authority

Transport Workers Union Pension Plan, Local 260, AFL-CIO Schedule of Retired Participants by Types of Benefits

Monthly Benefit Payment

Number of

Retirees

Type of Retirement Option Selected

1 2 3 4 5

1 2 3 4 $1 - $500 417 28 179 42 - 168

344 62 10 1

501 - 1,000 440 51 216 94 - 79

310 129 1 - 1,001 - 1,500 389 58 271 59 - 1

242 146 1 -

1,501 - 2,000 216 25 189 2 - -

164 52 - - 2,001 - 2,500 34 3 30 1 - -

32 2 - -

2,501 – 3,000 - - - - - - - - - - Over 3,000 - - - - - - - - - -

1,496 165 885 198 - 248

1,092 391 12 1

1. Normal retirement for age and service Option 1 - Life only 2. Early retirement Option 2 - Joint and 50% survivor 3. Disability retirement Option 3 – Joint and 100% survivor 4. Vested termination retirement Option 4- Other 5. Beneficiary

117

Metropolitan Transit Authority Transport Workers Union Pension Plan, Local 260, AFL-CIO Statements of Changes in Fiduciary Net Position for 10 Years

From December 31, 2015 to December 31, 2006

2015 2014 2013 2012 2011 Additions Employer contributions $ 19,062,423 $ 13,477,182 $ 14,335,058 $ 14,444,476 $ 13,493,652 Investment income Interest and dividends 1,380,500 1,815,928 1,618,017 1,899,115 1,498,725 Net appreciation (loss) on investments (8,338,049) 7,632,448 30,987,053 24,177,917 (1,312,402) Investment income (6,957,549) 9,448,376 32,605,070 26,077,032 186,323 Less investment services 852,342 1,013,392 804,134 694,340 692,570 Net investment income (7,809,891) 8,434,984 31,800,936 25,382,692 (506,247) Total additions 11,252,532 21,912,166 46,135,994 39,827,168 12,987,405 Deductions Paid to Plan members and beneficiaries 16,567,409 15,923,974 14,886,564 13,474,692 12,432,267 Administrative services 314,046 319,754 218,461 192,453 186,582 Total deductions 16,881,455 16,243,728 15,105,025 13,667,145 12,618,849 Net (decrease) increase in net position (5,628,923) 5,668,438 31,030,969 26,160,023 368,556

Net position restricted for pension Beginning of the year 229,990,069 224,321,631 193,290,662 167,130,639 166,762,083 End of the year $ 224,361,146 $ 229,990,069 $ 224,321,631 $ 193,290,662 $ 167,130,639

Source: Annual audited financial reports Prior to 2011 investment expenses were included as part of Administrative expenses

(Continued on next page)

118

Metropolitan Transit Authority Transport Workers Union Pension Plan, Local 260, AFL-CIO Statements of Changes in Fiduciary Net Position for 10 Years

From December 31, 2015 to December 31, 2006

2010 2009 2008 2007 2006 Additions Employer contributions $ 12,416,849 $ 12,185,728 $ 8,826,606 $ 16,527,492 $ 17,540,722 Investment income Interest and dividends 1,246,229 1,532,692 2,958,370 3,636,856 3,266,399 Net appreciation (loss) on investments 22,401,396 31,012,863 (54,088,497) 6,356,175 12,082,677 Investment income 23,647,625 32,545,555 (51,130,127) 9,993,031 15,349,076 Less investment services - - - - - Net investment income 23,647,625 32,545,555 (51,130,127) 9,993,031 15,349,076 Total additions 36,064,474 44,731,283 (42,303,521) 26,520,523 32,889,798 Deductions Paid to Plan members and beneficiaries 11,618,089 10,558,290 9,403,082 9,289,658 8,265,265 Administrative services 707,785 550,728 670,387 603,156 535,480 Total deductions 12,325,874 11,109,018 10,073,469 9,892,814 8,800,745 Net increase (decrease) in net position 23,738,600 33,622,265 (52,376,990) 16,627,709 24,089,053

Net position restricted for pension Beginning of the year 143,023,483 109,401,218 161,778,208 145,150,499 121,061,446 End of the year $ 166,762,083 $ 143,023,483 $ 109,401,218 $ 161,778,208 $ 145,150,499

Source: Annual audited financial reports Prior to 2011 investment expenses were included as part of Administrative expenses

Documents

Metropolitan Transit Authority Transport Workers Union ......Certificate of Achievement for Excellence in Financial Reporting 6 Financial Section 7 Independent Auditors’ Report 8